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What Will Happen If We Raise the Minimum Wage? - YouTube
Channel: Above The Noise
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(gentle music)
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- So before I was the amazing YouTube host
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that you see before you today,
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I worked a minimum wage
job at a donut shop.
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This is the actual shirt that I wore
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when I worked there for two years.
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Now, I mean, the job had obvious perks.
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Oh, would you look at that,
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just like these right here.
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But the pay?
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(mumbles)
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The pay, that wasn't so great.
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(record scratches)
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This is great.
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Minimum wage is the absolute lowest wage
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that the law allows a
business to pay a worker.
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Nationally, the U.S.
Government has that set
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at a number of $7.25 an hour,
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and it's been that way for ten years.
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But my job was in Oakland, California,
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which passed its own minimum wage law,
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so I got $12.25 an hour.
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So, if I got paid five bucks an hour more
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than the federal minimum wage,
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isn't that a good thing?
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Well, Oakland is part of the Bay Area,
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which is one of the most expensive places
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in the entire country.
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I'm talking $7 coffees,
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and $1,500 bucks a
month to rent a bedroom.
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No, not an apartment, the bedroom.
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No kitchen, no living room, just one room,
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with four other people
also renting a room.
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It's crazy.
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That's why I still live with my mom.
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Thanks mom!
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Now if I had that same job at a donut shop
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in say, Houston, Texas,
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I'd be getting that same $7.25 an hour,
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because that's what the
minimum wage is there.
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And that brings us to the
never-ending minimum wage debate,
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some think $7.25 an hour
is way to low to survive on
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no matter where you live,
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even if where you live is cheap.
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They wanna raise it to $15 an hour,
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so no matter what city
or state you work in,
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you can't make less than that.
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Others think that the minimum wage
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isn't designed for people to survive on.
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It's supposed to be an entry-level wage
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for workers with no skills
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to get a foot in the door, gain skills,
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and then quickly move on
to higher-paying jobs.
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Raising it could force
businesses to fire workers
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and raise their prices,
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which could hurt the economy.
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So, should the U.S. raise
the federal minimum wage?
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The reason people are talking
about the minimum wage today
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is because of what
happened seven years ago
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in late 2012.
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Hundreds of fast food
workers in New York City
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walked off their jobs,
demanding better pay.
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The reason?
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Minimum wage wasn't enough to get by on.
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Those strikes snowballed into
the Fight For $15 movement,
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which went national,
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and pushed to raise the
federal minimum wage
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from $7.25 an hour to $15 an hour.
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Democrats in the House of
Representatives took notice.
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They recently passed a bill
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that would raise the minimum wage
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to $15 an hour by 2024.
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But, Republicans in the Senate
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have no plans on taking up the bill.
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And, president Trump has
threatened to veto it
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if it ever does pass.
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So it pretty much has zero
chance of passing right now.
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But if you really wanna understand
the minimum wage debate,
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you've gotta go back even
earlier, to the late 1800s.
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Historians called it the Gilded Age.
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Business was booming, but
there was massive inequality,
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almost all the money was going
to the people at the top,
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dudes with top hats and monocles
who owned the railroads,
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and most of the businesses,
and Boardwalk and Park Place.
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Now we all know, you just can't win
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when someone owns
Boardwalk and Park Place.
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Basically, these guys had all the power,
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and didn't pay their workers well at all.
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In 1890, the average
American made $380 a year,
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that's $11,000 in 2019 dollars.
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That can get you, what,
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maybe three month's worth
of rent in San Francisco?
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Maybe?
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When the Great Depression
hit in the 1930s,
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President Franklin D. Roosevelt
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wanted to do something about inequality.
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In 1938, Roosevelt signed
the Fair Labor Standards Act,
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which set the first ever
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national minimum wage at 25 cents an hour,
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which would equal about $4.45 today.
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Since that time,
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Congress has increased
the minimum wage 22 times.
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The current level of $7.25
was last set in 2009,
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when President Obama signed it into law.
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And that's what makes
the minimum wage debate
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in the U.S. different.
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Many other countries tie the
minimum wage to inflation.
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See, as time passes, money is worth less.
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$100 in 1900 could buy way
more than $100 could today,
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so tying minimum wage to inflation
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means that it increases
automatically every year or two
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so that it doesn't lose its value.
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The U.S. requires a new law every time
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to raise the minimum wage.
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That means the House,
Senate and the President
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all have to sign off on it.
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And they don't agree on stuff that often.
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That's why we have the
same minimum wage we've had
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for the last ten years.
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And over that time, it's
lost 16% of its value,
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that $7.25 an hour is
now worth $6.10 an hour.
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Now, here's where things
get a little complicated.
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States, counties, and
even cities can pass laws
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to set their own minimum wage.
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It just has to be equal to or greater than
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the federal minimum wage.
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For example, in California,
it's $12 an hour,
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but in the City of San
Francisco, it's over $15.
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Looking at the country as a whole,
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21 states have a minimum
wage of $7.25 an hour.
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But in the other 29 states plus D.C.,
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there's a higher minimum wage.
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And then there are counties
and cities peppered throughout
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with their own minimum wages.
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For many supporters,
raising the minimum wage
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is a basic issue of fairness
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in a society where income
inequality keeps rising.
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They think putting more money
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in the pockets of low-wage workers
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is an effective way to reduce poverty.
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Let's look at the numbers.
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$7.25 an hour works out to $58 a day
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if you work eight hours.
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So if you work five
days a week, every week,
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nonstop for an entire year,
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you'd make a little over $15,000.
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Check out this poverty chart
from the federal government.
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A worker supporting a family of two
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would be almost $2,000
below the poverty line.
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So, what happens if you raise
their wages to $15 an hour?
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A report from the
congressional budget office
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calculated that it would boost the pay
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of 27 million workers,
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and it would lift 1.3 million
people above the poverty line.
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It's also important to understand
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who the typical minimum wage worker is.
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An old stereotype is that
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they're mostly just teens in high school
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who need a little extra spending cash.
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Now, it is true that
teens make up a big chunk
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of minimum wage workers,
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but more than half are over 25.
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A lot of these workers
make so little money
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that they qualify for some
form of government assistance
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like food stamps or housing support.
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One study by the Economic Policy Institute
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found that for every dollar
the minimum wage is increased,
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spending on government
assistance drops by $5.2 billion.
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So, if companies had to
pay their workers more,
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it would actually save
the government money.
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Now, it's one thing to talk about
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increasing the minimum wage in theory,
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but what does it actually
look like on the ground?
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To figure that out, we hit
the streets of San Francisco,
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which has one of the highest
minimum wages in the country,
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at $15.59 an hour.
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We talked to a 25 year old
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who makes slightly above
that at a local supermarket,
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and the owner of multiple
packing and shipping stores
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who employs minimum wage workers.
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He's also the president of a
local merchant's association
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that was against raising the
minimum wage in San Francisco.
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- If my pay was $7.25 now, at this point,
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it would be very difficult.
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I would probably be
working seven days a week,
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six days a week, and really
having to penny pinch,
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and really learn how to budget, you know?
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But now, now that I'm making
a little bit more money,
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that gives me a little bit play room,
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a little bit time to stretch, you know.
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And it makes me able to do more things.
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- The business owner has
a slightly different take
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on raising the minimum wage.
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- The worst case
scenario, from my opinion,
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is that, if minimum wage goes too high,
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you're gonna see a lot of
companies consider other options,
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eliminating the human.
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My response to that was, is,
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I invested in a lot of technology,
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which reduced a lot of the
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labor-intensive parts of my business,
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so I wound up hiring less people.
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And now I employ a lot less people
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and I have more locations.
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So the net effect is I'm
employing less people.
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- And this brings us to the major argument
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against raising the federal minimum wage.
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A lot of people think it'll kill jobs.
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Think about it, increasing
the minimum wage
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means businesses have to spend more money
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to pay their employees.
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And not every business
is like Amazon or Apple,
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with endless amounts of money.
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Many are small mom and pop shops,
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so they might have to cut
back on employee hours,
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or lay people off.
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Economists have been arguing for decades
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about whether or not raising
the minimum wage kills jobs.
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Many agree that a small increase won't,
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but going from $7.25 to $15 is not small.
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It's more than double.
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A report from the
Congressional Budget Office
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predicts that a $15 minimum wage
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could force employers to
lay of 1.3 million workers.
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And if you're a teen, sorry,
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but they're usually the first to go,
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because they have the
least amount of skills,
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and it's just not cost-effective
to pay them a high wage
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to essentially learn on the job.
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If we did increase the minimum wage,
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some economists worry about
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what that would do to the economy.
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With higher wages, many businesses
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would have to raise their
prices to pay for it.
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Over time, that could
increase the cost of living,
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and low-wage workers might
be back to square one,
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where everything's too expensive
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compared to how much money they're making.
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- Somehow people thought that, "Hey,
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"you're going to raise the minimum wage,
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"and everyone's gonna have more money."
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But you don't realize that, okay, well,
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someone's making $10 an hour,
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and his wage goes up to $15,
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well, that hamburger that
he's been buying for $10,
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now is probably gonna go up to $12 or $13,
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provided that nothing else goes up,
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other than the minimum wage.
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- Other businesses might do the opposite.
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They might do the math,
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figure they can't afford the higher wages,
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and just shut down.
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All right, you've heard
the major arguments
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for and against raising the minimum wage.
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There are a lot of potential pluses,
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and potential minuses,
and even experts disagree.
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But what do you think
we should do, and why?
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Let us know in the comments below.
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And if you like crunching numbers,
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check out an episode we did
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all about universal basic income.
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And for all you teachers,
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if you wanna bring this
topic into the classroom,
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check out on our web site, KQED Learn.
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I'm your host, Myles Bess.
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Peace out, blessings, hugs and kisses,
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I'm gonna go finish the
rest of those donuts.
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See ya later!
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